Abstract
In this research paper, I determine equilibrium real exchange rate of Algerian Dinar (DZD) in order to see the influence of fundamental factors toward Algerian Dinar exchange rate, and to understand the appropriate level or sustainability long term trend. Furthermore, I figure out the misalignment for real exchange rate of Algerian dinar. The period of this research paper covers the post crisis era from 1980 to 2009 (quarterly). Using co-integrating regression, I find that variables OIL, GC, LQ, TR, NCF, CF, OPEN and TT have significant influence to real exchange rate in the long run. Misalignment episode gives us seven patterns of situation during this period which are undervaluation during the periods: 1981Q1-1984Q2, 1988Q1-1992Q4, 1994Q2-1996Q4, and 2002Q3-2008Q2; and overvaluation during the periods: 1984Q3-1987Q4, 1993Q1-1994Q1, and 1997Q1-2002Q2.
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